TRADE ALERT

$10 Million NAFTA Penalty

(December 5, 2006)

Customs and Border Protection (CBP) announced that a $10-million settlement had been reached in a case which involved Pioneer Speakers. The case involves filing NAFTA claims on its stereo speaker importations from Mexico which, according to CBP, were made from foreign parts assembled, but not manufactured, in Mexico.

On top of that staggering claim, Pioneer was also hit with a penalty of $15,855,275 for alleged recordkeeping violations.

In announcing the settlement, CBP stated that NAFTA is the largest free trade agreement in which the United States participates and so "CBP will vigorously police NAFTA rules and will ensure that NAFTA's provisions are not abused." What is striking about the quote is the use of the word "police" and not the usual "enforce."

Deringer's consulting & regulatory affairs group offers a full scope of services to support importers/exporters, carriers, and supply chain partners, and can assist importers in obtaining rulings and researching how these modifications may affect them.

For more information regarding this advisory, please call 518-297-3511, or email us at consulting@anderinger.com